False, you may still qualify!
You don’t need to be 100% debt-free to buy a home or qualify for a mortgage. There are certain things that lenders will look at though, one of the most important being your current debt and how it compares to your income.
When calculating your debt-to-income ratio based on your recurring monthly payments, your student loans will be included as part of your monthly expenses, however, you only need to include your minimum required monthly payment.
Lenders like to see a debt-to-income ratio of 50% or less, so if your student loans are or other monthly expenses are contributing too much, focus on paying them down before you consider buying a home. If you’re still set on buying a home, there are other steps you can take to improve your chances of qualifying for a mortgage.
✔️ Consider loan types other than a conventional loan if your DTI ratio is too high|
✔️Pay off another debt to eliminate recurring expenses and free up cash flow
✔️ Increase your income with a side hustle to help lower your DTI ratio
Have questions? Let’s chat!
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